Why Nations Fail: The Origins of Power, Prosperity, and Poverty

several states abandoned producing crops for export and ceased commercial activity. Autarky was safer than facing the Dutch. In 1620 the state of Banten, on the island of Java, cut down its pepper trees in the hope that this would induce the Dutch to leave it in peace. When a Dutch merchant visited Maguindanao, in the southern Philippines, in 1686, he was told, “Nutmeg and cloves can be grown here, just as in Malaku. They are not there now because the old Raja had all of them ruined before his death. He was afraid the Dutch Company would come to fight with them about it.” What a trader heard about the ruler of Maguindanao in 1699 was similar: “He had forbidden the continued planting of pepper so that he could not thereby get involved in war whether with the [Dutch] company or with other potentates.” There was de-urbanization and even population decline. In 1635 the Burmese moved their capital from Pegu, on the coast, to Ava, far inland up the Irrawaddy River.
    We do not know what the path of economic and political development of Southeast Asian states would have been without Dutch aggression. They may have developed their own brand of absolutism, they may have remained in the same state they were in at the end of the sixteenth century, or they may have continued their commercialization by gradually adopting more and more inclusive institutions. But as in the Moluccas, Dutch colonialism fundamentally changed their economic and political development. The people in Southeast Asia stopped trading, turned inward, and became more absolutist. In the next two centuries, they would be in no position to take advantage of the innovations that would spring up in the Industrial Revolution. And ultimately their retreat from trade would not save them from Europeans; by the end of the eighteenth century, nearly all were part of European colonial empires.
    W E SAW IN CHAPTER 7 how European expansion into the Atlantic fueled the rise of inclusive institutions in Britain. But as illustrated by the experience of the Moluccas under the Dutch, this expansion sowed the seeds of underdevelopment in many diverse corners of the world by imposing, or further strengthening existing, extractive institutions. These either directly or indirectly destroyed nascent commercial and industrial activity throughout the globe or they perpetuated institutions that stopped industrialization. As a result, as industrialization was spreading in some parts of the world, places that were part of European colonial empires stood no chance of benefiting from these new technologies.
T HE A LL -T OO -U SUAL I NSTITUTION
    In Southeast Asia the spread of European naval and commercial power in the early modern period curtailed a promising period of economic expansion and institutional change. In the same period as the Dutch East India Company was expanding, a very different sort of trade was intensifying in Africa: the slave trade.
    In the United States, southern slavery was often referred to as the“peculiar institution.” But historically, as the great classical scholar Moses Finlay pointed out, slavery was anything but peculiar, it was present in almost every society. It was, as we saw earlier, endemic in Ancient Rome and in Africa, long a source of slaves for Europe, though not the only one.
    In the Roman period slaves came from Slavic peoples around the Black Sea, from the Middle East, and also from Northern Europe. But by 1400, Europeans had stopped enslaving each other. Africa, however, as we saw in chapter 6 , did not undergo the transition from slavery to serfdom as did medieval Europe. Before the early modern period, there was a vibrant slave trade in East Africa, and large numbers of slaves were transported across the Sahara to the Arabian Peninsula. Moreover, the large medieval West African states of Mali, Ghana, and Songhai made heavy use of slaves in the government, the army, and agriculture, adopting organizational models from the Muslim North African states with whom they traded.
    It was the development of the sugar plantation colonies of the Caribbean beginning in the early seventeenth century that led to a dramatic escalation of the international slave trade and to an unprecedented increase in the importance of slavery within Africa itself. In the sixteenth century, probably about 300,000 slaves were traded in the Atlantic. They came mostly from Central Africa, with heavy involvement of Kongo and the Portuguese based farther south in Luanda,